German Automotive Market

MAGO

EU DIVISION

CHOSEN COUNTRY:

GERMANY

M A R C H 21S T 2

0 1 4

THE GERMAN AUTOMOTIVE MARKET

KEYS IDEAS

• First-class brands – BMW, Volkswagen AG, Daimler AG• A strong and steady demand stimulated by one of the

highest GDP per capital but also cultural factors• An industry labeled for its quality and reliability• Innovation is one of the pillars of the German Automotive

Market, sustained by strong relationship between universities and research

institutions• A large network of small but competitive companies, for

instance, Germany hosts the largest concentration of OEM plants in Europe.

Investor opinion: These Industries have Potential in Germany“Which three of the following industries do you regard as the main drivers of growth in Germany?”

Source: Ernst & Young Standort Deutschland 2012.Up to three responses possible. Total respondents: A representative panel of 201 international decision-makers.

EUROPE'S MOST ATTRACTIVE COUNTRIES“WHICH THREE COUNTRIES ARE IN YOUR OPINION THE MOST IMPORTANT INVESTMENT LOCATIONS DURING THE NEXT THREE YEARS?”

Source: Ernst & Young Standort Deutschland 2012.Up to three responses possible. Total respondents: A representative panelof 840 international decision-makers

WHAT TO REMEMBER

• German economy is one of the most attractive in EU

• Europe’s largest automobile market based on production and sales figures.

• Germany is the European car production leader : some 5.9 million passengers cars were manufactured in German plants in 2011

• The country can be a support for exporting to others countries. Around 77% of cars produced in Germany is 2011 were ultimately destined for foreign shores.

COMPETITORSSeveral major global firms (Robert Bosch GmbH, CalsonicKansei Corp.,

Benteler Automobiltechnik GmbH)

Still, medium-sized suppliers account for 85% of the market

This diversity provides economic stability and growth

A great opportunity to gain a competitive advantage (differentiating ourselves from the competition by extensively using or R&D facility, because OEMs are trying to move the costs of R&D to suppliers)

Moderate power over buyers

CUSTOMERSMany German car manufacturing companies (BMW, Daimler, Volkswagen, Opel),

which have 47 OEM sites in Germany

Concentrated in certain areas across the country (SW, SE, E), which are all easily accessible (which might help us in facilitating JIT production, thus gaining an advantage)

Eager to interact with suppliers to develop R&D partnerships (especially as far as CO2 emissions are concerned)

Face a continuously growing demand and consequently need reliable suppliers to provide high-quality, relatively cheap (this relates to the costs we incur) car parts

The competition between them might also reduce their power over their suppliers

COSTL A B O U R C O S T I N C R E A S E H A S B E E N T H E L O W E S T I N E U R P O E .

A N N U A L I N C R E A S E O F 1 . 6 %

C O M P E T I T I V E N E S S I N T E R M S O F M A N U F A C T U R I N G C O S T I S H I G H E R T H A N F R A N C E A N D I T A LY A N D S I M I L A R T O J A P A N .

COST• The World Bank LPI ranking shows that Germany ranked 1st

in Logistics Performance Index (Transportation cost, inventory carrying cost, warehousing cost, packing cost etc).

ECONOMIC FACTO

RS

W H Y GE R M A N Y ?

B E L G I U M :P O P U L A T I O N : 1 1 . 1 M I L L I O NG D P P E R C A P I T A : $ 3 7 , 8 8 3I N F L A T I O N : 2 . 6 %G R O W T H : - 0 . 2 %F D I I N F L O W : $ -1 6 1 3 . 8 M I L L I O N

F R A N C E :P O P U L A T I O N : 6 3 . 4 M I L L I O NG D P P E R C A P I T A : $ 3 5 , 5 4 8I N F L A T I O N : 2 . 0 %G R O W T H : 0 . 0 %F D I I N F L O W : $ 2 5 . 1 B I L L I O N

Holland (Netherlands):Population: 16.8 millionGDP per capita: $42,194

Inflation: 2.8%Growth: -0.9%

FDI inflow: $-244.1 million

Italy:Population: 60.8 millionGDP per capita: $30,136

Inflation: 3.3%Growth: -2.4%

FDI inflow: $9.6 billion

Germany:Population: 81.9 millionGDP per capita: $39,028

Inflation: 2.1%FDI inflow: $6.6 billion

Growth: +0.9%

Largest economy in Europe and 5th largest economy in the

world in PPP

Economic review

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CURRENCY/EURO-ZONEL O C A T I N G I N A C O U N T R Y W I T H T H E E U R O A L L O W S E A S I E R T R A D E F O R W H E N W E D O C H O O S E T O F U R T H E R O U R S A L E S .

W H E N T R A D E D O E S B R O A D E N T O O T H E R C O U N T R I E S , T H E U S E O F T H E E U R O W I L L B E A D V A N T A G E O U S O V E R E U R O P E A S I T W I L L S A V E T R A N S A C T I O N C O S T S E T C . A L S O R E M E M B E R T H A T G E R M A N Y I S A L A R G E P L A Y E R I N T H E E M U A N D A R E N O T S P E C I F I C A L LY S T R U G G L I N G A S O T H E R C O U N T R I E S H A V E B E E N . T H E E U R O - Z O N E I T S E L F I S C U R R E N T LY M A K I N G A S L O W R E C O V E R Y A N D G E R M A N Y A N D F R A N C E A R E S E E N A S T H E D R I V E R S O F T H I S .

GERMANY, WORLD’S TOP-RANKED INFRASTRUCTURE

TAX ENVIRONMENT

A STABLE LABOUR COST

MOTIVATED AND DEPENDABLE EMPLOYEES

A HIGH SKILLED WORKFORCE

ENGINEERING EXCELLENCE

CONCLUSION